Archive for May, 2020

Waiving salaries or dividends

Thursday, May 28th, 2020

HMRC advice for people choosing to give up their income to support their business or donate to charity during the coronavirus (COVID-19) pandemic has been published.

Business owners who have decided to give-up their rights to receive dividends, salary or bonuses from their companies need to follow HMRC’s guidelines to be effective.

To be effective tax-wise, the pay-back or waiving of remuneration needs to be done before they are paid and by following HMRC’s instructions. HMRC’s advice says:

During the COVID-19 pandemic, many people are choosing to give up part of their income to support their business or employers or donate to charity.

HMRC is keen to support people who choose to waive – or give up – part of their income, particularly when it comes to understanding any tax implications.

Employers, directors and employees have several options to support a business or employer, including:

  • waiving their salary or bonuses before they are paid
  • waiving the right to any dividends
  • giving salary or dividends back to their employer after they have been paid
  • Payroll Giving
  • Gift Aid

Waiving salary or bonuses before they are paid

A ‘waiver of remuneration’ happens when an employee gives up rights to remuneration and gets nothing in return. If an employee and employer agree to a reduction in the employee’s remuneration before they are paid, for example to support company cashflow during the pandemic, then no Income Tax or National Insurance contributions (NICs) will be due on the amount given up.

This is provided the agreement is not part of any wider arrangement to divert the amount to a particular recipient or a cause. For example, if it were waived on condition that the sum would be donated to a particular charity, this would still be liable to tax.

Waiving dividends

Directors or other shareholders, including employees, are able to waive their right to be paid a dividend.

For this to be effective, a Deed of Waiver must be formally executed, dated and signed by shareholders and witnessed and returned to the company.

The waiver must be in place before the right to receive a dividend arises. For final dividends, this is before they are formally declared and approved by the shareholders. For interim dividends, the waiver must be in place before the dividends are paid.

Giving salary or bonuses back to your business or employer after they have been paid

It is possible to give back salary or bonuses to a business or employer after they have been paid. However, it is not possible to claim back the Income Tax and NICs that would already have been deducted from the salary or bonuses on payment.

Bonuses must be waived before the date they are due to be paid. If they are waived on or after the due date then tax will still be payable on them, even if the bonus is not paid over.

Donating to charity

Payroll Giving is a way of giving money to charity without paying tax on it. It must be paid through PAYE from someone’s wages or pension. If you are an employee, you should select a registered charity to donate to, and let your employer’s payroll department know.

 

Employers should contact a Payroll Giving agency to set up a scheme. The donation will be taken from employees’ pay before Income Tax but after National Insurance. Any registered charity in the UK or the EU recognised by HMRC for tax purposes can receive donations through Payroll Giving.

Gift Aid

Donating through Gift Aid means charities and community amateur sports clubs can claim an extra 25p for every £1 donated.

This means that if you donate to an eligible charity, the charity can claim back from HMRC the basic rate tax you would have paid on the amount. This is a way of giving to charity tax efficiently even after you have been paid.

 

Coronavirus – Business update 27 May 2020

Wednesday, May 27th, 2020

This week, the formal process to claim back certain Statutory Sick Pay (SSP) payments is launched. From 26 May 2020, employers can register their claim using a new online process.

Making a claim

To use the online service, you will need the Government Gateway user ID you received when you registered for PAYE Online. If you did not register online you will need to enrol for the PAYE Online service.

If you use an agent who is authorised to do PAYE online for you, they will be able to claim on your behalf.

If you are unable to claim online an alternative way to claim will be available.

To make a claim you will need:

  • your employer PAYE scheme reference number
  • contact name and phone number of someone we can contact if we have queries
  • UK bank or building society details (only provide bank account details where a Bacs payment can be accepted)
  • the total amount of coronavirus SSP you have paid to your employees for the claim period – this should not exceed the weekly rate that is set
  • the number of employees you are claiming for
  • the start date and end date of the claim period

You can claim for multiple pay periods and employees at the same time. The start date of your claim is the start date of the earliest pay period you are claiming for. The end date of your claim is the end date of the most recent pay period you are claiming.

Records you must keep

You must keep records of SSP that you have paid and want to claim back from HMRC. You must keep the following records for 3 years after the date you receive the payment for your claim:

  • the dates the employee was off sick
  • which of those dates were qualifying days
  • the reason they said they were off work – if they had symptoms, someone they lived with had symptoms or they were shielding
  • the employee’s National Insurance number

You can choose how you keep records of your employees’ sickness absence. HMRC may need to see these records if there is a dispute over payment of SSP.

Cash boost for new business start-ups

Tuesday, May 26th, 2020

Innovative businesses and start-ups are set to benefit from a £40 million government investment to drive forward new technological advances. It was announced 20 May 2020, that government is doubling investment in the Fast Start Competition with an additional £20 million.

The competition aims to fast-track the development of innovations borne out of the coronavirus crisis while supporting the UK’s next generation of cutting-edge start-ups.

Among the successful projects to receive the funding to date, is a virtual-reality surgical training simulator and an online farmers’ market platform.

Innovate UK has received a record number of applications – over 8,600 to the Fast Start Competition and will now be able to distribute investment to over 800 projects.

Projects receiving funding include:

  • I3d Robotics which is building a virtual-reality training/teaching platform to enable medical students to upskill remotely and perform simulation surgeries.
  • Volunteero Ltd has developed a social media app to connect local communities and allow volunteers to target support to the most vulnerable members in their neighbourhoods.
  • Elchies Estates Limited is setting up new virtual farmers’ markets to replace traditional markets which have had to close as a result of COVID-19, providing a platform for local businesses and farmers to sell produce.

 

The Fast Start Competition was launched in April in response to the outbreak and is being managed by Innovate UK.

 

 

Social distancing at work

Thursday, May 21st, 2020

The following guidelines have been released to cover social distancing concerns if working in offices or call centres. The objective being to maintain 2m social distancing whenever possible.

The published guidelines are:

You must maintain social distancing in the workplace wherever possible. Where the social distancing guidelines cannot be followed in full in relation to a particular activity, businesses should consider whether that activity needs to continue for the business to operate, and, if so, take all the mitigating actions possible to reduce the risk of transmission between their staff.

 

Mitigating actions include:

  • further increasing the frequency of hand washing and surface cleaning
  • keeping the activity time involved as short as possible
  • using screens or barriers to separate people from each other
  • using back-to-back or side-to-side working (rather than face-to-face) whenever possible
  • reducing the number of people each person has contact with by using ‘fixed teams or partnering’ (so each person works with only a few others)

Social distancing applies to all parts of a business, not just the place where people spend most of their time, but also entrances and exits, break rooms, canteens and similar settings. These are often the most challenging areas to maintain social distancing.

Coming to work and leaving work

Objective: To maintain social distancing wherever possible, on arrival and departure and to ensure handwashing upon arrival.

Moving around buildings and worksites

Objective: To maintain social distancing wherever possible while people travel through the workplace.

Workplaces and workstations

Objective: To maintain social distancing between individuals when they are at their workstations.

For people who work in one place, workstations should allow them to maintain social distancing wherever possible.

Workstations should be assigned to an individual and not shared. If they need to be shared they should be shared by the smallest possible number of people.

If it is not possible to keep workstations 2m apart then businesses should consider whether that activity needs to continue for the business to operate and if so take all mitigating actions possible to reduce the risk of transmission.

Meetings

Objective: To reduce transmission due to face-to-face meetings and maintain social distancing in meetings.

Common areas

Objective: To maintain social distancing while using common areas.

Accidents, security and other incidents

Objective: To prioritise safety during incidents. In an emergency, for example, an accident or fire, people do not have to stay 2m apart if it would be unsafe.

People involved in the provision of assistance to others should pay particular attention to sanitation measures immediately afterwards including washing hands.

Full details are available on the gov.uk website

The suggested actions that need to be taken to comply with the above objectives are listed here: https://www.gov.uk/guidance/working-safely-during-coronavirus-covid-19/offices-and-contact-centres

Coronavirus – Business support updates 19 May 2020

Tuesday, May 19th, 2020

Trade credit insurance guarantee

Last week, the government announced that businesses with supply chains that rely on Trade Credit Insurance, and who are experiencing difficulties maintaining cover due to coronavirus disruption, will get support from government.

In a news story released 13 May 2020, the Treasury said:

Trade Credit Insurance provides cover to hundreds of thousands of business to business transactions, particularly in non-service sectors, such as manufacturing and construction. It insures suppliers selling goods against the company they are selling to defaulting on payment, giving businesses the confidence to trade with one another. But due to Coronavirus and businesses struggling to pay bills, they risk having credit insurance withdrawn, or premiums increasing to unaffordable levels.

To prevent this from happening, the government will temporarily guarantee business-to-business transactions currently supported by Trade Credit Insurance, ensuring the majority of insurance coverage will be maintained across the market. This will support supply chains and help businesses to trade with confidence as they can trust that they will be protected if a customer defaults on payment.

Retail businesses that can now open for business

The following list was updated (13 May 2020) for retail businesses in England that can now open for business.

  • Food retailers including supermarkets
  • Dental services, opticians, audiology services, chiropody, chiropractors, osteopaths and other medical or health services (including physiotherapy and podiatry services), and services relating to mental health.
  • Pharmacies and chemists, including non-dispensing pharmacies
  • Petrol stations
  • Bicycle shops
  • Homeware, building supplies and hardware stores, including where those stores supply equipment for hire
  • Garden centres and plant nurseries
  • Veterinary surgeries and pet shops
  • Agricultural supplies shops
  • Convenience stores, corner shops and newsagents
  • Off-licences and licensed shops selling alcohol, including those within breweries
  • Laundrettes and dry cleaners
  • Post offices
  • Taxi or vehicle hire businesses
  • Car repair and MOT services
  • Car parks
  • Banks, building societies, short-term loan providers, credit unions, savings clubs, cash points, currency exchange offices, businesses for the transmission of money, and businesses which cash cheques.
  • Storage and distribution facilities, including delivery drop off or collection points where they are on the premises of any of the above businesses
  • Public toilets
  • Shopping centres may stay open but only units of the types listed above may trade

Six-month extension to MOT dates

Monday, May 18th, 2020

A reminder that if you need to renew your vehicle MOT after 30 March 2020, the usual annual renewal date should have been extended by six-months. Conditions that apply are:

Eligibility

Your MOT certificate will be extended by six-months if it was due to expire on or after 30 March 2020 and your vehicle is a:

  • car
  • motorcycle
  • light van
  • other light vehicle

First MOT due

The extension also applies to these types of vehicles that are due their first MOT test on or after 30 March 2020. There are different rules if your MOT expiry date was on or before 29 March 2020.

How the 6-month extension works

Your vehicle’s MOT expiry date will be automatically extended by 6 months if it is eligible. This will be done about 7 days before it is due to expire. This means that:

  • your vehicle will still have a valid MOT certificate for an extra 6 months
  • you can still tax your vehicle – you might need to wait to do this until later in the month if both your MOT and vehicle tax run out this month
  • your insurance will still be valid
  • your vehicle’s record will be updated so the police can see you have a valid MOT

You will not get a new paper MOT certificate with the new expiry date on it. You must still keep your vehicle safe to drive.

What you need to do

Your vehicle’s MOT expiry date will be updated about 7 days before it was originally due to expire.

  1. Three days before your MOT was originally due to expire, check the expiry date has been extended.
  2. If the expiry date has not been extended 3 days before it was due to expire, email covid19mot@dvsa.gov.uk.

You need to include these details in the email:

  • the date your MOT expired
  • your vehicle registration number (number plate)

The Driver and Vehicle Standards Agency will then:

  • update your vehicle’s record
  • email you to tell you this has been done

If your vehicle tax and MOT run out in May

You cannot renew your vehicle tax until your MOT expiry date has been extended. It will be extended a few days before it was originally due to expire. This means you might need to wait until later in May to tax your vehicle.

Check that the MOT expiry date has been extended before you tax your vehicle.

Keep your vehicle safe to drive

You must make sure your vehicle is safe to drive (‘roadworthy’). It can be unsafe even if your MOT expiry date has been extended.

Coronavirus – Business support updates 13 May 2020

Wednesday, May 13th, 2020

Easing back from lock-down

Boris Johnson made his long-awaited statement on the government’s plans to ease lock-down (7pm, Sunday 10 May 2020). No great surprises and we have included a brief business-related summary in this post.

In his address he said:

And the first step is a change of emphasis that we hope that people will act on this week.

We said that you should work from home if you can, and only go to work if you must.

We now need to stress that anyone who cannot work from home, for instance those in construction or manufacturing, should be actively encouraged to go to work.

And we want it to be safe for you to get to work. So, you should avoid public transport if at all possible – because we must and will maintain social distancing, and capacity will therefore be limited.

So, work from home if you can, but you should go to work if you cannot work from home.

And to ensure you are safe at work we have been working to establish new guidance for employers to make workplaces COVID-secure.

And when you do go to work, if possible do so by car or even better by walking or bicycle. But just as with workplaces, public transport operators will also be following COVID-secure standards.

There are copious instructions for employers, on safeguarding the workplace, and these can be found on the gov.uk website.

 

On your bike…

Last week the government announced a £2bn package to create a new era for cycling and walking.

As walking and cycling are two of the most effective ways to get from A to B whilst respecting social distancing measures, this announcement is good news.

In the news story published at the time of the announcement, changes to be undertaken are summarised as follows:

Following unprecedented levels of walking and cycling across the UK during the pandemic, the plans will help encourage more people to choose alternatives to public transport when they need to travel, making healthier habits easier and helping make sure the road, bus and rail networks are ready to respond to future increases in demand.

The government will fund and work with local authorities across the country to help make it easier for people to use bikes to get around – including Greater Manchester, which wants to create 150 miles of protected cycle track, and Transport for London, which plans a “bike Tube” network above Underground lines.

Fast-tracked statutory guidance, published today and effective immediately, will tell councils to reallocate road-space for significantly increased numbers of cyclists and pedestrians. In towns and cities, some streets could become bike and bus-only while others remain available for motorists. More side streets could be closed to through traffic, to create low-traffic neighbourhoods and reduce rat-running while maintaining access for vehicles.

 

Vouchers will be issued for cycle repairs, to encourage people to get their old bikes out of the shed, and plans are being developed for greater provision of bike fixing facilities. Many more will take up the Cycle to Work scheme, which gives employees a discount on a new bike.

The final statement, regarding the Cycle to Work Scheme, could be a relevant option for employers to consider as there are tax benefits for employees.

 

Chancellor extends Furlough scheme

The Chancellor announced further support for employers (12 May 2020) by extending the Coronavirus Job Retention Scheme (CJRS) until the end of October 2020.

This will be a welcome change for those business owners endeavouring to find a constructive way to manage the present lock-down and other disruptions and emerge from the process with a viable business.

Details announced to CJRS today are:

  • Support will continue until the end of October 2020.
  • Furloughed workers will continue to receive 80% of their current salary up to the existing £2,500 maximum.
  • New flexibility will be introduced from August 2020 with the intention of getting employees back to work. Initially, part-time.
  • From the same date, 1 August 2020, employers may be asked to contribute.

 

Regarding the August changes the Chancellor said:

As we reopen the economy, we need to support people to get back to work. From the start of August, furloughed workers will be able to return to work part-time with employers being asked to pay a percentage towards the salaries of their furloughed staff.

Detailed information regarding the new flexible approach – part-time working – will be published towards the end of May 2020.

Employers will need to factor these changes into their business plans as we emerge, all-be-it slowly, from lock-down.

Claim now for the Self-Employed grant

HMRC have now updated their instructions regarding the claims process for the Self-Employed Income Support Grant (SEISS).

Originally, the grants were promised – for eligible individuals – for early June 2020.

The good news? You can now make claims from today for payment this month IF you qualify for the SEISS.

This involves checking to see if you are eligible. You will need your Unique Tax Reference number and NIC number to do this. You will then be advised if you are eligible to claim and when you should apply.

 

Claiming tax relief for home office expenses

Thursday, May 7th, 2020

In the past, claims for the costs of home office furniture and other equipment has been difficult to obtain unless your employer dictates that you must work from home.

With the advent of lock-down and working from home now mandated for a large proportion of the working population, HMRC are being inundated with claims.

Employees that are covering their own home working costs

  1. Consumable items, printer cartridges for example, can be claimed as an expense.
  2. If you buy equipment to enable homeworking, desk, chair, shelving, computers etc., as long as the purchase was required to facilitate home-working, you should be able to write off the full cost by claiming a capital allowance.
  3. You can also claim £6 a week from 6 April 2020 (£4 per week 2019-20) to offset additional electricity costs or other costs you have had to pay as a direct result of working from home.

All of the above claims will be reduced if your employer makes a full or partial contribution towards these costs.

Employers that are covering employees’ home working costs

Employers that provide equipment, services and supplies to an employee who works from home, do not have to report or pay any tax or NIC if the items provided are only used for business purposes or any private use is insignificant.

Historically, employers that cover the cost of additional household expenses for an employee who works from home, did not have to report these or pay anything if both the following apply:

  • employees need to work from home, either because equipment they need is not available at your workplace, or their work means they have to live too far away from your workplace to travel there every day or
  • the amount you give them is not more than their additional household expenses.

It is assumed that the first of these two conditions is now fulfilled by the needs of the COVID-19 lock-down.

GUIDANCE FOR OUR CLIENTS – CORONAVIRUS (COVID-19) – UPDATED 4 MAY 2020

Wednesday, May 6th, 2020

As Marvin Gaye once asked: “What’s going on?”

Well, here is our latest news covering all of the measures in place so far, but we would like to highlight three important updates:

  • Employer support: the CJRS claims portal is now open, and we are able to deal with this for you.
  • Self-employed: The SEISS portal opens on 15 May, but you need to register for an online account.
  • Business loans: There is a new scheme open with 100% government backing for loans up to £50k.

Full details are given below. Note that all grants are taxable.

  • Self-employed (and members of partnerships)
    • In mid-May, HMRC will to invite claims from those deemed eligible, and they aim to make payments in early June. Full details are here: https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme#claim
    • You will need to register for a Personal Tax Account and online login (which should take 5-10 minutes): https://www.gov.uk/personal-tax-account
    • Agents are (currently) excluded from the online service, but we can check the claim figures, and talk you through the process over the phone.
    • If you can’t use the online route, HMRC will advise an alternative claim method in due course, but it will take longer to get your grant.
    • HMRC will not contact via email or text. Beware of scams!
    • You must have been self-employed in 2018/19 (and filed your tax return by 23 April 2020), remain so now, and intend to continue into 2020/21. You must have been adversely affected by Covid-19.
    • Self-employed with profits under £50k will qualify, as long as self-employment income is more than half of your total income in either: (a) 2018/19 year, or (b) on average for the three years to 2018/19. This may be useful if you had fluctuating profits.
    • For self-employment starting after 6 April 2016, there will be a pro-rata adjustment.
    • The grants are similar to the Job Retention Scheme (see below) for those on PAYE, i.e. 80% of profits, with a maximum of £2500.
  • Employment Support (Job Retention Scheme)
    • The claim portal is open, and we are processing client claims. If you would like us to deal with this for you, let us know. Claims are being paid within about a week.
    • You can pay staff, and reclaim, 80% of their normal wages, to a maximum of £2500, whilst furloughing them (essentially just telling them not to work).
    • This applies to all staff, including part-time, zero hours, casual workers and directors (as long as they do no revenue generating work) who were employed as at 29 February. The later date announced (19 March) is a red-herring as most employers would not have filed their March returns online with HMRC at that point.
    • The grants include employer national insurance and basic 3% auto-enrolment pension contributions.
    • Minimum furlough period is three weeks.
    • If you decide to pay some staff, but not all, more than 80% you need to be able to justify this. Use the same criteria as you would for any standard lay-offs or redundancies.
    • You should obtain employee agreement to furloughing, ideally in writing or via email, and may wish to obtain legal advice. For directors, a board minute is required, which we can draft.
    • You should probably hold off any possible redundancies, as you would not get any financial support for those payments.
    • The current scheme runs until 30 June, but we expect an amended version to be announced in due course, perhaps allowing some workers to return part-time, while still getting support.
  • Loan schemes
    • There is a new Bounce Back Loan scheme, offering loans up to £50k, with 100% government backing. All major lenders should offer these, so contact your bank for information.
    • https://www.gov.uk/government/news/new-bounce-back-loans-to-launch-today
    • The new loans are self-certifiable and, once agreed, funds should be available next day.
    • The earlier scheme (CBILS), with 80% government guarantee, remains open for larger sums.
    • Mortgage lenders have been told to view requests for three month repayment holidays sympathetically.
  • VAT
    • HMRC has agreed to defer VAT for one quarter (anything due between 20 March 2020 and 30 June 2020) until March 2021.
    • HMRC cannot stop direct debits so you need to contact your bank to cancel them.
    • VAT repayments will be made in the usual manner.
    • You must still submit VAT returns on time, or the usual penalties will apply.
  • Corporation Tax
    • This isn’t due until nine months after the last accounts year-end, but you may wish to would consider not paying it for now.
    • You would need to contact the Time To Pay helpline.
  • Personal income tax
    • The 31 July 2020 instalment may be deferred, without interest or penalty, until 31 January 2021.
  • Rates
    • Grants are now being paid out so, if you have not heard from the local authority already, you need to set up your online account with them and make an application.
    • If you pay little or no rates, due to Small Business Rate Relief (SBRR), there is a £10k grant available.
    • Those in retail, hospitality and leisure will have to pay no rates, and may be able to claim a £25k grant for larger premises (rateable value £15k to £51k).
  • Rent
    • You should contact your landlord to discuss a rent holiday.
    • Eviction of non-paying tenants is not really an option for most landlords, as they wouldn’t be able to re-let the premises anyway, and would probably rather have a reliable tenant at the end of this.
    • For landlords on the receiving end of requests, you may be able to obtain mortgage repayment holidays for three months.
  • Discretionary spending
    • This could be the time to think about stopping your own pension payments, but you should discuss this with your financial advisers.
  • Insurance
    • Unfortunately, most policies simply do not cover pandemics, but you should check the policy wording.
    • Travel insurance policies are unlikely to cover Covid19 for the foreseeable future, even for “essential” trips. 

Best wishes, and stay safe and healthy

Andy, Simon, Jo, Hannah and the team

Tax Diary May/June 2020

Tuesday, May 5th, 2020

1 May 2020 – Due date for corporation tax due for the year ended 30 July 2019.

19 May 2020 – PAYE and NIC deductions due for month ended 5 May 2020. (If you pay your tax electronically the due date is 22 May 2020).

19 May 2020 – Filing deadline for the CIS300 monthly return for the month ended 5 May 2020.

19 May 2020 – CIS tax deducted for the month ended 5 May 2020 is payable by today.

31 May 2020 – Ensure all employees have been given their P60s for the 2019-20 tax year.

1 June 2020 – Due date for corporation tax due for the year ended 31 August 2019.

19 June 2020 – PAYE and NIC deductions due for month ended 5 June 2020. (If you pay your tax electronically the due date is 22 June 2020)

19 June 2020 – Filing deadline for the CIS300 monthly return for the month ended 5 June 2020.

19 June 2020 – CIS tax deducted for the month ended 5 June 2020 is payable by today.

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